Nevada officials are in the midst of “confidential negotiations” on a settlement agreement to bring the state into compliance with the Americans with Disability Act almost a year after a federal investigation found that the state routinely failed to adequately treat youth with behavioral health disabilities.

During a legislative update meeting Monday hosted by the Division of Health Care Financing and Policy, state officials said that part of the funding solution will arrive in the form of a newly implemented provider tax on private hospitals that will, in part, leverage Medicaid funds directly toward the behavioral health services identified in the report. 

The provider tax — passed in the form of SB435 during the 2023 legislative session — builds upon an existing framework that grants private hospitals the ability to vote for a state-assessed “provider tax” of no more than 6 percent, with the money generated earmarked as supplemental Medicaid payments as part of a federal dollar-matching program. 

The bill allows the state to pull up to 15 percent of the “provider tax” for administrative costs. Any remaining money collected for administrative purposes would need to be set aside for future Medicaid expenditures aimed at supporting “behavioral health care for recipients with serious behavioral health conditions and psychiatric disorders” — a direct response to the Department of Justice’s investigation.

“[The provider tax revenue] will help support some of the activities and new services and supports that are going to come out of this settlement agreement to improve services for children in the community with behavioral health disorders,” state Medicaid Administrator Stacie Weeks said. “The goal is obviously to keep them out of that inpatient and residential treatment setting and to keep them in their homes and their community when possible.”

The state cleared the first hurdle for implementing the tax Sept. 1, when the private hospital tax survey passed with a supermajority of 67 percent of private hospitals in support. The provider tax is projected to generate more than $875 million for new supplemental Medicaid payments to private hospitals in Nevada, with up to $30 million going toward youth behavioral health services, which can be matched with federal dollars.

Revenue generated will fund supplemental payments to an estimated 55 hospitals for Medicaid services, enhance reimbursement rates and pay for state administrative costs to implement the new tax.

Officials with Nevada Medicaid did not immediately respond to emailed questions Tuesday about what the funding will be used to pay for in terms of services, whether the state will be employing outside entities to address behavioral health needs and more details about how the state plans to come into compliance with the Americans with Disabilities Act. 

During the Monday meeting, state officials said that once the settlement with the federal government is finalized, the state will host a public meeting about the next steps in the process.

A timeline presented Monday indicated that the tax will be implemented in January, pending federal approval, with the payments starting in March and ongoing tax invoices and payments occurring quarterly.